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Cyprus Property News

New legislation on property ownership to help owners without title deeds.

Date: 30/09/15

When Cyprus was bailed out (or was it bailed-in!) in March 2013 by the Troika of international lenders, we all knew there would be many changes.

The “Memorandum of Understanding” that accompanied the loan from Troika aimed to address many of the problems that where ingrained within Cypriot society and business practices.

Title deeds (or the lack of them) has been a major problem for the Cypriot property market due to indebtedness of developers and the quite frankly absurd lawfulness of selling property on already loaned land. A practice that is criminal in most countries was allowed to continue for years while developers moved debt from older projects to newer in order to release titles for the old developments. Of course, this type of business method relies on developers continuing to sell at constantly increasing prices. Such scenario very much looks like pyramid economics fueled by foolish bank lending.

When the property crash came in 2008 developers were unable to clear the loans on older projects. In Cyprus titles for any property are issued first in the developer’s name who could only pass them to the owner after all the debt on the land was cleared. This issue effectively blocked the issuance of title deeds to thousands of legitimate owners.

To further complicate matters title deeds can only pass from one entity to the other when the Land Registry is in possession of a valid Tax Clearance certificate for that specific property. To get tax clearance developers have to have their books up-to-date and tax paid. Sadly many title deeds where blocked because developers could not afford to pay the due taxes.

That’s the bad news, now here is the good! Under the guidance to Troika technocrats Cyprus recently enacted new property related laws to ensure that those who have paid for their properties in full and whose title deeds have been blocked through debt to the banks or to the tax man can now receive their title deeds regardless of the mentioned problems. By making application to the relevant Land Registry office, title deeds can be wrenched from the hands of developers and banks and transfer to their legitimate owners. The applications which are expected to take around 4- 6 months to complete will result in owners paying transfer fee to the Land Registry with a discount of 15% (if paid within a month of notification to collect the deeds) over and above the 50% discount rate already on offer!

So, where does the developers’ debt go? First, to other land in the name of the specific developer; if they have none – to the development company itself and lastly – to the directors of the developing company… We guess if all these routes prove dead-end then the bank who lent the money so recklessly will have to swallow a write off.

And so ends the theory. In practice it will mean protection for the 1000s of home owners who have paid for properties and who are denied legal title through indebtedness on the land or problems with the tax man. Great news for many owners and the Cypriot property market in general. As an agent who always insisted of listing only “clean” properties with titles or with clear land searches we applaud this modernization of the property laws in Cyprus.